Utah company launches cable alternative

A Utah company launched what it called a digital cable-style subscription television service "for the rest of us" on Tuesday, an alternative that eliminates the coaxial cable and strips basic service to a few essential networks with a price to match.

For $19.95, USDTV, based in Draper, gives subscribers in Salt Lake City 32 channels, including local broadcast outlets. ESPN, ESPN2, Fox News Channel, Disney and Discovery Channel are five of the 10 cable networks included in the package.

The service is also available in Albuquerque and is expected to launch in Las Vegas in the next month, and the company hopes to offer service to 30 markets by year's end. About 1,000 customers have signed up in Salt Lake.

USDTV works by collecting feeds from the broadcast stations and cable networks at a single digital transmission tower, which then uses once-idle bandwidth -- bought from the stations -- to spray the signals to standard UHF/VHF antennas. Customers must buy a $99.95 set- top device to decode the channels. USDTV promises digital-quality picture and high-definition reception for HDTV programming.

The company says its monthly price won't increase until 2006.

"We are definitely taking the low-cost space," USDTV chairman and chief executive Steve Lindsley said after unveiling the service at a New York City news conference.

The lower cost and cable's reputation for raising prices above the rate of inflation, Lindsley said, "is going to leave open a tremendous opportunity for us to take a group that they leave behind."

Though cheaper, the $19.95 package doesn't approach the channel quantity of standard-tier cable service, which averages about $40 through Comcast in Salt Lake City. But, Lindsley said, the channels picked for USDTV's basic service represent "arguably 80 percent of what the average Utah home watches anyway."

The company, along with another recent startup, the New York state- based Voom network, also touts its high-definition and digital capabilities, services not widely enjoyed by standard-service customers of cable companies.

Both USDTV and Voom will have a "real struggle to be successful," said Phillip Swann, president and publisher of television technology Web site TVPredictions.com.

They are trying to capitalize on the fact that Comcast, Cox Communications or Time-Warner Cable don't yet have a large lineup of high-definition channels, Swann said, but only because the market has not yet demanded it.

"That's the key. They will have that lineup," Swann said. "By the time people get to know what USDTV or Voom is, it isn't going to matter."

Cablevision Systems launched Voom, a satellite TV service exclusively for high-definition televisions, last fall in a beta test.

Nationwide subscribers pay about $40 a month for 21 high- definition channels and 40 others. For double that amount, you can add 36 premium and other channels, including digital music.

Broadcasters share in USDTV's monthly subscription fees and may share additional revenue generated by on-demand content stored on a hard drive to be incorporated into the USDTV receiver by the end of 2004. Individual stations get a percentage of revenues based on the amount of bandwidth provided by the station, multiplied by the number of subscribers.

Contributing: Mark Thiessen

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